California continues the process of establishing reforms to Proposition 65, officially known as the Safe Drinking Water and Toxic Enforcement Act of 1986. As we previously reported, California's Office of Environmental Health Hazard Assessment (OEHHA) issued proposed amendments to the regulation on March 7, 2014 and, after considering substantial public input, released a revised draft warning regulation and a separate website regulation on September 23, 2014.

OEHHA is expected to issue a new draft in early 2015. Preparing for this next round and related regulations, OEHHA solicited comments on the following action items:

Prioritizing chemicals in the development or update of Safe Harbor levels

Establishing where additional interpretive guidelines are needed

Determining whether data on postnatal developmental exposures should be considered

On November 14th, the California Chamber of Commerce and nearly one hundred-forty California-based and national organizations and businesses (Coalition), submitted comments in response to OEHHA's request. As outlined below, the comments focused on increasing protections for the food industry with an eye towards reducing frivolous "shake-down" lawsuits, whereby defendants settle to avoid the exorbitant cost of litigating meritless suits.

With these principles in mind, the Coalition proposed modifications such as:

a warning exception under Section 25505 so warnings are not required when a chemical is present in food as a result of the cooking process,

substantial revisions to the "naturally occurring" regulation to alleviate the burden faced by defendants, and

characterizing Safe Use Determinations and interpretive guidance so that courts may use them in resolving lawsuits.

It is unclear how OEHHA will respond to these key stakeholder's comments. But OEHHA will certainly consider them, and has promised corresponding workshops in the near future. OEHHA will have to move quickly to maintain its current target of finalizing the revisions by summer of 2015. At this point, OEHHA has not signaled that the target will be delayed.

The Evolution of Proposition 65: Key Provisions and Changes in the Proposition 65 Proposal

While the proposal will likely do little to change the current climate or protect businesses from lawsuits brought by bounty hunter plaintiff attorneys, OEHHA's drafts have evolved to be less objectionable than the initial proposal released in March 2014. The below comparison of key provisions highlights these improvements:

Safe Harbor Approach

March 2014 Draft: The initial proposal replaced the "safe harbor" language in warnings with new mandatory language stating that use of the product "will expose" consumers to a chemical.

September 2014 Draft: The "safe harbor" language was reinstated, which allows businesses to either use the warning methods and content established in the regulation, to exercise the "safe harbor" protections, or use an alternative method and content that they believe to be "clear and reasonable."

The International Health Hazard Symbol

March 2014 Draft: Requires the use of the International Health Hazard Symbol to alert consumers that the product could pose a serious hazard.

September 2014 Draft: Revises the warning requirement to, instead, require the use of a yellow triangle with an exclamation mark in the center.

OEHHA Website

March 2014 Draft: Within 30 days of providing a Proposition 65 warning, businesses would have to submit a report including information such as anticipated levels of human exposure to a chemical. Reporting requirement is mandatory.

September 2014 Draft: Reporting is no longer mandatory and there is no private right of action for the OEHHA website. Additionally, the draft incorporates a process to correct information provided on the website and eliminates the requirement that businesses update information submitted on the website within 30 days "after the person providing a warning becomes aware that an exposure to an additional chemical or chemicals for the same product, occupational or environmental exposure requires a warning."

12 Specific Chemicals

March 2014 Draft: Requires disclosure of a chemical name in the warning if consumers are exposed to any of the twelve listed chemicals.

September 2014 Draft: OEHHA adds a provision stating that there was nothing prohibiting "a person from identifying chemicals or substances in the warning in addition to those identified in this section."

Grandfathering Provision

March 2014 Draft: Provides that parties to court-approved settlements prescribing warning content and requirements, prior to January 1, 2015, are not subject to the warning requirements articulated in the regulation.

September 2014 Draft: Non-parties to court-approved settlements may petition the Lead Agency to adopt the settlement provisions.

"Can Expose"

September 2014 Draft: The "will expose" language is eliminated and replaced with "can expose."

The Coalition's Comment Letter

The following overview of the Coalition's November 14th Comment Letter to OEHHA highlights key issues that remain a high priority for the business community.

Alternative Risk Levels for Chemicals in Food

Currently, Section 25703(b) provides that a "no significant risk" level is calculated to result that, in a population of 100,000, one case of cancer will occur during a lifetime of exposure, "except where sound considerations of public health support an alternative level."

In the comment letter, the Coalition requests that OEHHA make the following revisions: (1) Under Section 25505, articulate an exception to the warning requirement that arises where a chemical is present not because it has been added to the food, but as a result of the cooking process; (2) If OEHHA does not promulgate a warning exception in Section 25505, it should revise Section 25703(b)(1) to apply simply: "where chemicals in food are produced by cooking;" (3) Create a safe harbor under Section 25703(b)(1) as an alternative to the current "no significant risk" calculation, to be applicable to any listed chemical that is a by-product of cooking; lastly, under the proposed Section 25607.2, allow food warnings to consist of a designated warning symbol, with a link to OEHHA's website.

Naturally Occurring Regulation

A chemical is exempt from the warning requirements where they occur naturally. Section 25501(a)(1) of the current regulation defines a chemical to be naturally occurring "if it is a natural constituent of a food, or if it is present in a food solely as a result of absorption or accumulation of the chemical which is necessarily present in the environment in which the food is raised, or grown, or obtained." However, the Coalition's position is that, as currently written, the regulation places a heavy burden on businesses. To exercise this exemption, a business must demonstrate (1) that the chemical did not result from a known human activity; (2) good manufacturing or agricultural practices could not have prevented the presence of the chemical; and (3) the chemicals were reduced to the "lowest level currently feasible." As a result, in the Coalition's view, significant regulatory modifications are needed.

Safe Use Determination Process/Interpretive Guidance

Under Proposition 65, OEHHA has the responsibility to provide guidance to those affected by the Act. Section 25204 provides that Safe Use Determinations (SUDs) may be issued "to represent the state's best judgment concerning the application of the Act to the particular facts present in the request." In addition, OEHHA may offer interpretive guidance to assist industries to comply with the regulation.

The Coalition argues that both processes have fundamental flaws that render them useless in providing certainty to businesses. First, the SUD process is expensive as businesses not only have to pay for their experts but OEHHA's experts as well. In addition, Proposition 65 fails to provide a clear statement as to the amount of evidentiary force courts should afford to SUDs. Lastly, requests for an SUD cannot stem from the subject of a 60-day notice or complaint.

Interpretive guidelines are not rife with the flaws of SUDs - businesses do not have to pay for OEHHA's experts to receive interpretive guidance, and a request may be considered if the business is currently faced with a 60-day notice or a complaint has been filed. However, in practice, interpretive guidelines provide little repose to businesses as they are merely suggestions without the force of law.
As a result, the Coalition offers the following modifications:

SUDs and interpretive guidelines should be issued based on a preponderance of evidence standard of proof;

The regulation should be revised to allow courts to rely on SUDs and interpretive guidelines to resolve lawsuits;

A reasonable timeframe for the consideration of SUDs should be established; and

OEHHA should provide businesses, early in the SUD process, the cost of its experts.

Regulatory Provisions on Averaging Exposures

OEHHA's request for comments related to the provisions on averaging exposures centers on whether the warning requirement is triggered by a chemical level of a single exposure or if exposure should be based on the average chemical level. The Coalition asserts that OEHHA should refrain from promulgating any modifications as the regulations are sufficiently clear.

Safe Harbor Levels

The Coalition believes that the development and updating of safe harbor levels are important to ending frivolous lawsuits and, thus, should be made a high priority in the upcoming workshops. Its comment goes on to caution OEHHA against finalizing a chemical known to be present in food until "either OEHHA has adopted a safe harbor for that chemical or until OEHHA has received substantial comments from affected industries requesting that no safe harbor be adopted."

Postnatal Development Exposures

According to the Coalition, "OEHHA's long-standing public statements concerning reproductive toxicity correctly limit reproductive toxicity to toxicity resulting from fetal exposure or toxicity to the reproductive system." As such, no regulations should be adopted pertaining to this concept.

Additional Proposals
The Coalition's letter adding the following changes, in addition to the proposals OEHHA explicitly requested for comment:

"Knowingly": The Coalition recommends that the definition be revised to reflect that a business lacked knowledge if an exposure assessment was performed by a qualified scientist, pursuant to the regulations articulated in the regulation, and the assessment concluded that a warning was not required.

Chemical Listing Process: The Coalition recommends that each chemical listing includes the substance analyzed in the reports or studies in which the chemical's inclusion is based. In addition, the listing should also include the route of exposure by which the effect was identified.

60-Day Notices of Foods and Ingredients: The Coalition recommends that the regulation be modified to incorporate a provision requiring that, when a notice pertains to food products or ingredients, it is served on the California Department of Food & Agriculture.

Stakeholders should continue to closely monitor the Proposition 65 developments for the announcement of future workshops and draft proposals.